Does Socialized Medicine Work? A Look at British Health Care

With health care reform high on Washington’s agenda, many observers warn against adopting “socialized medicine,” while others look to the European-style single-payer systems as a model. But how does nationalized health care work in the U.K., and what, if anything, can America learn from the British example?

Founded in 1948 amid a flurry of welfare-state reforms, the British National Health Service (NHS) advanced three core principles: “that it meet the needs of everyone, that it be free at the point of delivery, and that it be based on clinical need, not ability to pay.”

Initially, this egalitarian plan drew similar criticism to that now faced by American reform efforts. A BBC account of the NHS’s birth documents doctors’ concerns about their professional independence, as well as political accusations of “national socialism as practised in Germany.” Unlike most proposals under consideration in the U.S., the NHS is a single-payer system, in which the government, as the nation’s only health-care purchaser, has no private competition.

Although centrally funded and officially directed by the Department of Health, the NHS in England operates mainly through local agencies known as Primary Care Trusts (PCTs). Most patients enter the system through these PCTs, which, as the NHS Web site breaks down, control 80 percent of the health budget and oversee general practitioners (GPs), pharmacists, dentists and other “independent contractors” to the government. These professionals form the “first point of contact” for most patients, and GPs act as gatekeepers to specialists. The country’s largest employer, the NHS in England, employs over 1.3 million people and serves a population of 50 million.

Health care is free for all citizens, and, besides a few exceptions, all prescriptions cost the same price of £7.20. The NHS relies heavily on generic drugs, with the independent National Institute for Health and Clinical Excellence (NICE) determining which drugs the NHS should cover. NICE decisions yield frequent controversy in Britain, and their cost-effective philosophy has been criticized as literally “putting a price on life.”

At £102.7 billion, the 2009-10 NHS budget increased 7.5 percent from the year before, on an inflation-adjusted basis. Due to the recession, the Times reports that significant cuts are expected over the next few years, including a real-term budget increase of only 1.6 percent next year.

Americans often discuss British health care as a settled question, a pristine model to embrace or dismiss. But the U.K. health care reform debate, though starting at an opposite end of both the Atlantic and the philosophical spectrum, is as contentious as America’s. Spiraling health costs have spurred a series of reforms since 2000, which reduced costs but also sparked an almost existential argument over the core principles of British society. In a debate largely focused on quality versus equality, some worry that a new cost- and market-emphasis will lead Britain more toward American-style health care.

Last year, as findingDulcinea analyzed, the British government reversed a controversial policy on “topping up” health care with expensive prescription drugs. Under the old system, patients could not privately buy drugs without sacrificing all government financial support, even if they needed medication not funded by the NHS. Opponents to overturning the old policy argued that it would create a two-tier system, where wealthier people have greater access to treatment. By now allowing patients recourse beyond the system, the government has signaled a shift toward patient choice, rather than strict adherence to one of the NHS’s founding principles of strict equality.

In 2009, the government introduced a new Health Bill that augurs further change. Its provision for direct payments for health care through “individual health budgets,” for example, would give patients greater control over how their own health care money is spent. Meanwhile, the Labour party’s previously lauded “Private Finance Initiatives” (PFIs), which seek corporate investment in health infrastructure, have recently come under sharp scrutiny and attack.

The chairman of the British Medical Association, the Guardian reports, has spoken out against “the target-driven culture” created by reform, which he claims “put[s] financial outcomes for trusts above clinical outcomes for patients.” Over the past few years, both the BBC and the Guardian have collected similar opinions on the NHS from a range of health care professionals. While many point to excessive, expensive and interfering bureaucracy as a major weakness in the system, most also express pride in the ideals behind the NHS and optimism for the future. Mike Travis, a hospital nurse, worried that increasing emphasis on “patient choice” might hurt the “more vulnerable in society,” potentially reducing the NHS “to little more than a logo.”

A poll released by the British Medical Association nevertheless reveals continued public support for the NHS: over three-quarters of the population would spare the NHS from budget cuts at the cost of other governmental departments.

Although one of the most prominent examples of universal health care, the U.K. does not necessarily provide a workable model for America. The U.S. is a larger and more complex country, and its health insurance has long been provided largely by employers.

Nevertheless, some states have experimented with adapting this universal model to the U.S. In 2006, Massachusetts passed legislation that struck a balance between individual and employer responsibility, and between state funding and private companies. In addition to an individual mandate to buy health care, employers must either cover or contribute to their workers’ plans. The state relies on private insurance companies but it provides subsidies for low-income residents and runs the Commonwealth Health Insurance Connector, which helps individuals find suitable plans.

According to the Kaiser Family Foundation, the Massachusetts plan has achieved moderate success. Within two years of the legislation’s passing, the state had cut its number of uninsured by over half. On the other hand, costs have outstripped predictions, and funding has repeatedly fallen short. Kaiser points to government subsidies and Medicaid as key components of Massachusetts’ qualified success, but to cost containment as essential to its future.

Critics dispute this success. Susanne L. King, a Massachusetts doctor, writes in the Boston Globe that their health reform “flunks” on all standards defined by the Institute of Medicine: insurance should be “universal, not tied to a job, affordable for individuals and families, affordable for society, and it should provide access to high-quality care for everyone.” King would detach insurance from employers and would instead expand Medicare to cover everyone, a solution that would move the U.S. far closer to the British system. On the other hand, State Treasurer Timothy Cahill recently questioned whether Massachusetts could afford to continue the plan, telling the Globe, “We’re all still waiting for the savings” that Universal health care was supposed to deliver. He cautioned, “It’s a warning for the federal government as it looks to do something similar.”

The success or failure of individual state reforms, like that of Massachusetts, may determine if the U.S. can strike a unique path to universal health care or if it must turn to a more established model like that of the U.K. As Americans ponder a shift toward the British example, though, that example might be moving closer to our system through market-based reforms.